Back to the complete issue
Tuesday, 25 September 2018

Central Bank of Egypt seen leaving interest rates on hold at 27 September 2018 meeting

**#2 Consensus is that the central bank will leave interest rates on hold this Thursday when its monetary policy committee meets, according to a Reuters poll out yesterday. Some analysts, including in Shuaa, see borrowing costs and the strength of the USD as the crucial factors at the meeting, saying concerns there will have supplanted inflation, the central bank’s traditional bête noire. “Inflation is decelerating, but emerging market exits is creating pressure to keep rates high,” said Radwa El-Swaify, head of research at Pharos Securities Brokerage. The global macro backdrop (read: Emerging Markets Zombie Apocalypse) most likely means the MPC will keep rates where they are to preserve Egypt’s competitiveness in the battle for hot money amid a sell-off in EM assets.

But could leaving where they are come at too-high a cost? The move would “send an unneeded message of weakness, and will not be enough to revert outflows, but will punish domestic activity and delay prospects of easing,” CI Capital’s Hany Farahat said.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.